Depfa Bank yesterday formally opened its Hong Kong liaison office for its Depfa Investment Bank subsidiary. The office will be run by Denis Lazat and will complement the bank's existing office in Japan.

Depfa Bank is German listed but Dublin headquartered. It has three main lines of business: budget financing for sovereign and semi sovereign borrowers; infrastructure finance within public private partnerships; and investment banking advice for the public sector.

The new office will be looking to find suitable avenues for these activities in Asia. Given the need for new infrastructure and the emergence of structural budget deficits across many countries, the timing looks to be right.

"We feel there is a lot we can do in Asia, in particular in our core business of public sector and infrastructure financing," said Gerhard Bruckermann, chairman and CEO of Depfa Bank, at the opening of the Hong Kong office. "We believe that the economic growth in the region will remain higher than the world's average and with half the world's population living within five hours flight from Hong Kong, the need for public sector and infrastructure financing will remain high."

However, many fortunes have been lost in the quest to finance Asia's undoubted infrastructure needs. Commentators point out that the region does not lack capital, rather it lacks suitable models with which infrastructure can be financed.

Depfa claims that its expertise in areas such as public private partnerships, which are just catching on in the region will allow it to compete. The bank also has a balance sheet of around Eur160 billion and can make credit decisions of billions of Euros in little over a week.

Bruckermann says that the bank has no internal rule about which currencies it can lend, but that the bank cannot take any outright FX risk. This means most of the lending in the region will be at the behest of the local swap markets. Deals that the bank has already done in the region include the Seoul Beltway toll road project and some debt buybacks for Thai Oil.

Nevertheless Bruckermann describes the bank's approach as "risk averse" and "risk disciplined", qualities that are not usually associated with business in Asia. "We will tread carefully here as we do not want to lose our track record of never booking losses on our assets - a track record we have held since 1922," he says. "We know less about Asia than other parts of the world and we need to learn about the market and how we can add value."

A further reason for the new office is so that the bank can be closer to its debt investors. Currently the bank issues around Eur8 billion - Eur10 billion of triple A debt every year, and roughly 30% of that goes to Asia. It has been borrowing from the region for the last ten years, and over 50% of its structured note products now get snapped up by Japanese investors.